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Despite the disappointment of the scrapping of Round Five of the National Rental Affordability Scheme and the cancellation of a number of projects due to inability to deliver on time, Perth Property Solutions are still managing to offer a stream of very good, cashflow positive NRAS properties.

for up to date stock lists, please contact any of our sales proffesionals.

WA Planning Commission vs Lenders vs Developers … and the winner is?

What is happening around town?  The land shortage continues and developers are grabbing what they can right now.  The other day I sat through a debate convened by the UDIA (Urban Development Institute of Aust) to discuss the land shortages.   There were two sides putting forward their ideas.

The WA Planning Commission put forward their view – shortage of land isn’t created by them, it’s the banks not lending, Water Corp & DEC hold ups etc.

The Lending institutes put forward their view – how can they lend on uncertainty of decisions of Govt departments and development timeframes.

And the winner is ….

The Developers!  There will be a shortage of land because of all the aforementioned reasons put forward by both sides.

The last couple of months have been generally slow moving in the real estate market. End of financial year, first homebuyers dropping out of the market and our first Prime Minister assassination being the main culprits.

First home buyers have really been struggling to get into the market with lending criteria tightening in recent months, however the investors have quickly taken over from them realizing they may have a bit more choice and time to make their decisions.

All in all the real estate market future is still looking bright – if you’re buying, there is great choice and some really good buying – if you’re selling, it’s critical to get your property priced perfectly. So what ever your current needs are, I’m always happy to help.

What type of property information do you believe in?

I saw the following 4 headings about real estate on a news website the other day and though I just have to share this. These headings were listed as follows one after the other on the same day

•    Housing shortage hits critical levels
•    Property prices post largest fall since 2008
•    Cheaper suburbs push house prices up
•    Mortgage applications on the rise

A mixed message from the media outlet, however it kinda reflects the sentiment of the real estate market in the last 3 months – UNCERTAINTY.

Given that we have had the elections, threat of interest rate rises, constant GFC doom & gloom, conflicting media and the banks squeezing borrowers like first home buyers, second home buyers, developers, self employed, Lo & No Doc’s, equity rich but cash flow poor, cash rich but equity poor, national and international investors out of the lending market – this not surprising.

While on the topic of banks, it was surprising to see the $5.66 billion bank profit achieved for 1 lender last financial year when funding can be challenging and expensive for the lenders! – It’s also very interesting how the banks’ super profits don’t attract super taxes unlike other profitable industries!!

BIS Shrapnel are predicting that commercial property will increase by 50% over the next 3 years.  Western Australia got the title of best economy in Australia and Mr Gavin Hegney indicates Perth is the place to invest.

Investors are running rampant with property at the moment. People with money to invest or access to lending are making the most of their property investing choices while they can.

We are finding more and more investors opting for NRAS investments as they are cash flow positive and allow people to buy more than 1 – all of the other benefits are just a serious bonus.

What type of dwelling should you invest in?

Being involved with the NRAS (National Rental Affordability Scheme) has enabled me to access some pretty interesting research on housing.  In particular the affordability of housing and the types of dwellings we require for now and in the future.

In the government’s studies into housing for the NRAS, they discovered a massive shortage of 1, 2 and 5 bedroom accommodation. Considering that just about everyone I speak to about investing, first home owning, upgrading and downsizing requires a 3 or 4 bed dwelling, this is not surprising.

After learning about these shortages I started to talk to people about this – most couldn’t and/or can’t conceive that we may have to live in smaller dwellings in the future. 

I then decided to do some research for myself and discovered that, in Australia, there are currently about 1.8m people living alone and that is predicted to double in the next 15 years. Approximately 35% of the population live as couples and this will increase to 52% over the next 15 years. How does this portion of the population reside? Answer = probably in dwellings too large for them.

When you put the above stats into perspective along with the research undertaken by the government, you have to wonder why developers and investors aren’t catering for this market/demographic – and also – with the number of people per dwelling declining rapidly what kind of housing crisis might we face in 10 years time?

Add to the equation that the costs of running a household are increasing rapidly – will we end up with an over supply of 3 & 4 bed dwellings that no one can afford to buy, rent or run?  An interesting question, and also an issue we must start thinking about.

The results of the RP Data-Rismark Home Value Index for June showed that the unit market has outperformed houses over the last 12 months and during the last five years.

Historically, houses have enjoyed a much more rapid appreciation in value than the growth recorded by units. There are a number of reasons for this more rapid level of growth: greater demand for houses, diminishing availability of development land, higher quality of stock and design available for houses rather than units and the great Australian dream to own a house rather than a unit, amongst a number of other reasons.

Despite these factors, over the last five years units have recorded average annual value growth of 7.4% compared to 7.1% for houses. However, the results suggest that the superior performance of units compared to houses is quite a new phenomenon as over the last 10 years the average annual value growth of houses (9.9%) has well and truly outperformed units (8.0%).

Perhaps with time we will be able to swallow the pill of smaller blocks and dwellings for residing and investing in and also embrace the new Australian dream of home ownership – Can I afford one?!